Marc Chandler – The Markets Say So What? to Weak PMI And Weak Housing Markets Along With Rate Hike And Muted GDP Next Week
Marc Chandler, Managing Partner of Bannockburn Global Forex and Editor of the Marc To Market website, joins us for a discussion on the macroeconomic factors moving the markets. We kick off the discussion with a look forward to next week where we’ll see what amount the Fed is going to hike rates by, as well as the GDP number. Both data points are sure to have plenty of market commentary, but Marc noted that so far, despite the expectation of a 75 basis point hike and a muted to potentially negative GDP number, the market has said “So what?”.
Another key data point from this week was a lower than expected PMI Purchasers Manager Index reading which showed a weakening economy, and this idea was further bolstered by US jobless claims numbers steadily rising since March of this year, as well as weaker housing starts. This hurt the US Dollar a little more than he anticipated, but some of that was also due to rate hikes being seen with the ECB, as well as Bank of Japan and Bank of Canada going through a bit more tightening
We wrap up getting Marc’s reading of the market differential of the Dec 2022 versus the Dec 2023 rate expectations, showing the market is anticipating rate cuts to come by the middle of next year, but that most participants are expecting the Fed funds rate to go from 1.75% currently to 3.5% by year end, which would mean a 75 basis point hike next week, followed by a 50 basis point in September, and then two more 25 basis point hikes in November and December. We also explore what the other prong of the Fed policy, QT – Quantitative Tightening, where the central bank will start reducing it’s balance sheet may mean for liquidity and the markets.
They should ban The IMF along with The Fed, both of their policies have been a disaster. We need less government and less intrusion in the financial markets. If you really went back and had a look at the policies of The IMF you would see nothing but money printing and high salaries paid out to top executives like Christine Lagarde. DT
+1 DT. They should and the markets would be much more free without the intervention and monetary vampirism that are the central banks.
More Law and fewer criminals.
Italian Politics Complicate the ECB’s Task
Marc Chandler – Marc To Market – July 21, 2022
“What has changed between now the Open Market Transactions (OMT) developed during the Great Financial Crisis is that the ECB now sees an unreasonable divergence of rates as an impediment of its monetary policy. The OMT needed to be triggered by the country under pressure, but the conditions were too severe, and it was never triggered. While much discussion of the interest rate spread focused on the 10-year, the transmission of monetary policy would seem to have more to do about the short-end the curve. Since the end of June, the Italian two-year premium has nearly tripled to 130 bp today. While some of the increase may have to do with the general rise in rates and belief that debtors like Italy do worse in a period of slow growth and high rates. It may be linked to the political uncertainty and the high costs if snap elections were necessary. President Lagarde may also say something about the favorable terms of the Targeted Long Term Refinancing Operations, the three-year loans from the ECB that was a separate channel from QE that expanded the central bank’s balance sheet.”
http://www.marctomarket.com/2022/07/italian-politics-complicate-ecbs-task.html
Crescat#85, Dr. Quinton Hennigh talks about Eloro Resources latest drill results at 1:04, he say’s it’s going to be a beauty of a mine. The grades just keep getting better, especially for tin. DT
Added to Eloro and Calibre.
I’ve added quite often over the last few weeks and months to my Calibre position. It is currently the heaviest weighted gold position and portfolio position I hold. Their team just keeps delivering on production growth, development growth, exploration success and expansion of resources, and I really liked their acquisition of Fiore last year into Nevada, and believe there is far more upside to that deal than the market gave them credit for.
The market won’t be saying “so what” after the rate hike next week, it’ll be screaming SELL, SELL, SELL!!!!!
Hope you enjoyed the little bump over the last couple days, because it won’t last long.
If you have any sense, you’ll be SELLING soon.
CASH IS KING!!!!!
SELL!!!
Have a good weekend.
Why?
Joe, your market analysis is so specific and detailed in reasoning, that it’s hard not to see clearly all the points you make with technical analysis, quant analysis, intermarket analysis, sentiment analyzation, and your commanding take on macroeconomic fundamentals.
Based on your financial advice to investors, I did sell a few things today and raised a bit more cash going into next week’s Fed hike. Following your prophetic lead as always. Much love!
Take your temperature and if normal, go see a doctor.
🤪
Priced in SILJ, Brixton (BBB) just had its best daily and weekly closes of 2022.
https://stockcharts.com/h-sc/ui?s=BBB.V%3ASILJ&p=W&yr=3&mn=9&dy=11&id=p64691171350&a=1211395250
I’ve taken Joe’s advice & loaded up on UVXY to mitigate his predicted disaster
Yeah, it is truly fantastic that Joe is providing financial advice to investors here.
I wonder where he was trained and certified in financial planning? Mount Olympus?
Michelle Makori should interview him on Kitco.
Great idea Terry. Or we can interview him here and get to the bottom of these astounding financial insights.
Dismal EMU Flash PMI on Heels of First ECB Rate Hike since 2011
July 22, 2022 – Marc Chandler
“The euro is over a cent lower from yesterday’s peak, pressured by the drop in the flash PMI composite below 50 for the first time since early last year. More generally, the flash PMIs have shown the global economic momentum is waning, and the bond markets have responded accordingly. The US 10-year yield is flirting with 2.80%, its lowest level in more than two weeks. European yields are 15-20 bp lower and the spread between Italian and German bonds has stabilized…”
“The ECB delivered the 50 bp rate hike that had been hinted at earlier in the week.”
“After signaling that future hikes were coming, Lagarde said there was no forward guidance for the next meeting. ”
“The dollar fell to a seven-day low against the Japanese yen near JPY137.00.”
http://www.marctomarket.com/2022/07/dismal-emu-flash-pmi-on-heels-of-first.html